Businesses’ Use of Personal Data from Consumers is at Risk

Report recommends key principles for corporate digital responsibility to promote greater digital trust

A new report from Accenture (NYSE: ACN) warns that businesses’ use of personal data from consumers is at risk and recommends key strategies and principles to properly protect consumer data, build trust and simultaneously grow their businesses.

The report, “Guarding and Growing Personal Data Value,” acknowledges the benefits of using personal data to support innovation in customer service, product development and market development. However, it also identifies the growing challenges that businesses face when using personal data, as a result of changing sentiments among stakeholders such as customers, regulatory bodies and watchdogs.

“Customer data is a digital ‘crown jewel’ for any business but an organization’s ability to collect, analyze and monetize that asset in the future is under threat due to shifting perceptions, preferences, regulations and attacks,” said Ryan LaSalle, managing director, Accenture Security. “Above all, stewardship and effective safeguarding of personal data is paramount to establishing digital trust. The implications of failing to do so extend into a business’s operating model —meaning businesses must be organized and have the capabilities to protect the data that is entrusted to them.”

The report is based on research conducted by the Accenture Institute for High Performance that included a survey of nearly 600 global business professionals across eight industry groups, interviews with academic experts, and other secondary research. Ninety percent of respondents said digital stewardship is the most important principle in terms of improving their business reputation and being responsible managers of personal data, and 74 percent said that their businesses are taking action on this principle.

The report identifies several trends affecting the outlook of businesses using personal data including:

• A crisis of trust in data security: Customers won’t do business with companies they don’t trust with their data—and customers’ trust in data security is lacking.
• Customers are acting on their privacy concerns: Customer actions to protect their data could compromise the amount and quality of personal data that businesses can use.
• Customers are demanding a data dividend: Nearly 60 percent of respondents from products and manufacturing companies reported their customers are actively monetizing their own data—for instance, by selling it to data intermediaries.
• New technologies and startups are helping people go “off grid”: Growth in new privacy-enhancing technologies could impact the quality of customer data available to businesses.
• Regulation is changing the rules of data collection: Governments are increasing their regulatory response to concerns over data privacy.
• Watchdogs are increasing the scrutiny of business data practices: Groups like Fair Data (U.K.) and Electronic Frontier Foundation (U.S.) are scrutinizing the way businesses manage personal data.

“Rather than fight these trends, businesses should pursue proactive strategies that will help them adapt to the changes ahead,” said Matthew Robinson, managing director, Accenture Institute for High Performance.  “This includes investing in the right talent and technologies to bolster their security capabilities and provide greater data protection, defining an operational model centered on risk management goals to better predict, detect, respond and recover from security threats, and taking action on the principles we’ve identified that can promote greater digital trust.”

The five principles outlined in the report include:

• Digital stewardship: Ensuring that management of personal data is consistent with the expectations of those providing it. Demonstrating personal data stewardship can help businesses differentiate themselves from the competition. Deutsche Telekom worked with email providers Web.de, T-Online and GMX to launch a secure end-to-end email communication service that stores user data within Germany, responding to fears of external surveillance of emails. The company saw a six-figure increase in new subscribers during the Edward Snowden revelations in 2013.

• Digital transparency: Demonstrating openness in how businesses use personal data. Companies can foster transparency by proactively showing customers and others how they are using and storing data. Nectar, a loyalty program that offers its 18 million customers full visibility of data collection and use, was singled out as an exemplar of transparency by the U.K. government.

• Digital empowerment: Giving customers greater control over their data. By mastering the two components of digital empowerment—enabling customers to update data held about them and using data analytics to help customers make better decisions—companies can improve customer satisfaction and unlock new sources of revenue.

• Digital equity: Clarifying and potentially increasing the benefits customers receive in exchange for sharing their data. Companies can strengthen digital equity by providing greater monetary or service-in-kind benefits to customers in return for their data. Kreditech—a German start-up that assesses credit risks—has issued more than 1.5 million small loans since its launch in 2012 on the basis of personal data from social networks or e-commerce retail accounts.

• Digital inclusion: Using personal data to multiply positive societal outcomes. Personal data that is shared appropriately can create significant value for society. In 2013, French telecoms company Orange worked with a think tank to map economic activity in Côte d’Ivoire using customer mobile phone data. Though designed to align urban development efforts with economic needs, the project also enables Orange to refine its business operations in Côte d’Ivoire.

The report is based on (1) an online survey of 578 business professionals across seven economies—Brazil, China, France, Germany, India, U.K. and U.S.—and across eight industry groups; (2) interviews with academic experts in the U.K.; and (3) secondary research including literature reviews, case studies and industry-leading practices undertaken by Accenture specialists.  The online survey was conducted by Kadence International between July and August 2015.

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